Ether is having a field day, enjoying substantial gains this past week.
The digital asset jumped 20% to reach about $445, a level that was last seen in late July 2018.
Ether started gaining after the price broke out of a two-month range between $210 and $250 towards the end of July. At the time of writing, Ether has been trading around $445, up 226% YTD.
“ETH is in a consolidation phase after hitting a recent high of $445 over the weekend. However, the correction has not been big, indicating market participants still have strong buying power. ETH still has a chance to test its previous high,” states OKEx in its daily report.
According to trader Crypto Wolf, Ether will hit new highs, $1,570 reached in Jan. 2018, in Q2 of next year.
$ETH ATH Q2 2021
— Wolf (@IamCryptoWolf) August 16, 2020
New Money is Flowing In
As we reported, this jump in price has been coinciding with the growing usage of the second largest network.
Even though Ether transaction fees broke all-time highs two days in a row at 17.8k ETH and 20.3k ETH last week, the daily transaction count is also nearing an ATH. The last peak was at 1.34 million that was set on January 4, 2018, when the average market price of Ether was $1,042, according to data source Santiment.
This 25-months high also has investors taking an interest in Ether futures and options, which hit a new peak last week.
The total value of outstanding contracts, open interest in Ether futures rose to a record high of $1.73 billion on Friday, breaking the previous high of $1.45 billion from August 5th, as per Skew. Open interest in the futures market has increased by 300% this year.
In the options market, which is skewed bullish, the OI has climbed to a record high as well at $454 million. This indicates money flowing into the digital asset with another positive aspect seen in the contango market.
DeFi Boom Powering Ethereum
In the meantime, the rising 1-month volatility for Ethereum has gone to 102% along with the 3-month volatility while the 6-month at 94%. This indicates that “the market is putting a lot of hope on Ethereum ‘succeeding’ in its efforts to transition from the current Proof of Work (PoW) to Proof of Stake (PoS),” said Denis Vinokourov, head of research at the London-based digital asset firm Bequant.
Only time will tell if these bulls will be right, the latest Ethereum testnet crashed last Friday and was unable to reach finality. A time-related bug was the problem at Prysm, which is used by the vast majority of validators.
For now, the market continues to grapple with out of control gas and transaction costs. All of which has been thanks to the popularity of decentralized finance (DeFi), which is growing at a fast pace.
On May 30th, the DeFi sector had $1 billion total value locked, which has grown more than 500% to reach a new peak of $6.31 billion today, as per Defi Pulse.
The amount of Ether locked in the sector has also grown massively in the past two months. From 2.5 million ETH two months back, there is now 4.5 million ETH locked in DeFi.
It is the DeFi boom, users rushing into yield-farming projects, that is powering the gas, activity, and gains in the Ethereum network.